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Top 5 Reasons why Customer-Centric Efforts Fail

 

Customer CentricityCustomer Experience Management is a holistic discipline involving all functional departments of a company (see examples here and here). However, many companies treat it as a set of “initiatives” limited to customer-facing units of the organization. The use of the term “initiative” often disguises a lack of commitment to the customer-centricity strategy and hints at the ephemeral nature of these efforts.  While even these tactical campaigns can generate positive ROI, the long-term impact on sustainability of the enterprise is not meaningful without commitment to an overall strategy of transformation into a customer-centric organization. 

 

Most business leaders are receptive, if not enthusiastic, about the customer centricity concept. Some even think that they are leading their companies toward that goal. How successful they really are in pursuing this goal can only be assessed by their customers. However, most companies talk the talk but fail to walk the walk. Here are the top 5 reasons why customer centricity is such an elusive target: 

 

  1. Lack of Customer Intelligence –  knowing How many customers one has, how many times they visit or buy, and how much money they spent over a period of time are operational data points, but not intelligence. You have to learn and measure who your customers are, and why they selected to do business with your company—then correlate this information with the operational data points.
  2. Optimization for operational efficiency first (i.e. cost reduction) instead of effectiveness (i.e.  customer lifetime value growth) – you have to adopt an outside-in perspective and design every step of the customer journey to make your company the first and only choice for your selected customers.
  3. “Shotgun” Marketing – mass marketing is going away with mass manufacturing. When you leverage your customer intelligence to design products and services that are simple to understand and simple to use by your selected (chosen) customers, the customer journey stops being a challenge. The best customer-centric companies do not distinguish customer support from marketing. Practice simplicity and prevention.
  4. Marketing designed for churn – everybody knows that a repeat customer has more value than a new one. How do you think an existing customer feels about the promotional offers you advertise for new customers, but then you exclude them? Practice Trust Marketing and remember that loyalty is a two way street. 
  5. Short-term perspective – leaders have to practice what they preach when it comes to priority of customer experience as a long-term strategy. That involves a fundamental change in belief system from a focus on quarterly profit targets to the long-term sustainability of the business. Contrary to popular belief there is no inherent conflict between the interests of customers and interests of the shareholders. However, there is an inherent conflict between the interests of investors (shareholders and customers) and share-traders, who demand quarterly improvements in sales and profits regardless of how harmful it may be for long term health of a company. “Take a long-term view, and the interests of customers and shareholders align,” says Jeff Bezos in a letter to Amazon investors.

 

 

Comments & Thoughts

  1. Kondwani B J Manda says:

    Very insightful Gregory, profound yet simply understood and most importantly it challenges traditional thought on subject.. A must read article to every professional marketer.

  2. Marc Mandel says:

    In my experience the biggest failure point is actually competing priorities especially in circumstances surrounding a lack of strong business case. These things either get shut down or delegated so low down the totem pole there’s no likelihood of success.

  3. Dipti S says:

    Customer Centricity – a way of conducting business

    Thank you Gregory for this very useful & lucid summary. I believe it will serve very well as a “what to avoid” quick reference for customer centricty & customer experience practitioners

    I would also agree with Marc when he says a key failure point is competing priorities.

    This, I have observed, tends to follow from a thought process which assumes that customer centricity is something to be done in addition to conducting day-to-day business as opposed a thought process which understands customer centricity to be the very manner of conducting day-to-day business!

  4. Aki Kalliatakis says:

    Dear Gregory,

    Very nice insights, and well suummarised. However, I need to point out that the most important reason for failure is a lack of top management commitment. All the other stuff is relatively easy to fix, but when executives aren’t fully on board, you may as well not even bother. You touched on this in point 5, and I love that quote from Jeff Bezos, but I think it’s more than only short-term thinking.

    Great article

  5. Gregory says:

    Kondwani, thank you for the kind words.

  6. Gregory says:

    @Marc and @Dipti – I obviously did not address this issue properly in the point 5. The reason for competing priorities is the short-term mentality. If executive management takes a long-term view, customer-centricity becomes the priority number 1.

  7. Gregory says:

    Thank you Aki.

    What do you think is the reason for lack of executive commitment? I would love your take on it.

  8. Joel Laramee says:

    Gregory- thanks for this!

    All five reasons for the failure of “initiatives” resonate strongly with me, but #2 (“Optimization for operational efficiency first– i.e. cost reduction– instead of effectiveness– i.e. customer lifetime value growth”) resonates the most. In my opinion, this point hits senior management right where they live!

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